Thing one: Trying to write about what happened yesterday or lately with any insight is really, really hard even though you KNOW what happened. Thing two: Trying to predict the future with its many moving parts is just plain crazy. I'm sticking with thing one and predict that in the future, I'll still be doing that.
- Jean Bolduc, Freelance Reporter (Chapel Hill News|News & Observer), Frequent Humorist, Happily married since forever, Renowned Philosopher (Mother of two).

Saturday, November 07, 2009

Healthcare Reform

Can you make sense of this debate anymore? I don't claim to speak for anyone but myself. I don't claim to have any special knowledge or insight on the topic of making it affordable for people to get good healthcare, but I will say that before they take away my Jell-o, I have moment of clarity I'd like to share.

What insurance is and isn'tI'm 51 years old. When I was a kid, my mother took me to a pediatrician. She paid on the way out, I imagine. Point is -- my dad worked for an insurance company -- one of the giants. They weren't in the transaction. You had health insurance for the unfortunate event of your being in the hospital. It was hospital insurance.

That's because being in the hospital was extremely expensive -- something you need insurance for -- like you house burning down or a devastating car accident. Insurance is meant to be what's called an aleatory contract -- one that depends on a contingency event. The truth is that in life insurance school they describe insurance as a bet.

In life insurance, the company's betting that you're going to live to be 100. You're betting that you'll die tomorrow. It's a crazy business.

Somewhere along the way, the notion came along ... during the 80s and early 90s, it seems to me, that a new financial model should exist for delivering healthcare. Just as Hillary and Bill were talking about reform, the industry declared that it was innovating. Welcome, managed care.

And then, something happened. Your health insurance company was in every transaction. They decided whether or not you needed a specialist. They decided how many visits it would take to treat you. It was a big game of "Mother, May I?"

And with their involvement came the main reason that insurance companies make money -- administrative cost. When I came to North Carolina in the late 1970s, Blue Cross and Blue Shield pridefully shouted that they were terrific because they had administrative costs of five or six percent. Their top executive at that time certainly made under $200,000. Middle and lower managers made in the $25k range -- about one tenth of what the CEO made. At that time, in the Triangle area of NC, you could buy a nice house for $50,000 to $65,000. A palace for $125,000.

The CEO of Blue Cross and Blue Shield of North Carolina, Bob Greczyn, is retiring. In 2005, he made over $2 million. Last year, he made just under $4 million. My guess is that he can smell the fresh breeze of reform and thinks that this may affect his exit strategy (parachute). Best to get out quietly while there's still enough hot air to get the chute open.

In the late 1970s, Blue Cross and Blue Shield of North Carolina operated as a non-profit, a status that it technically maintains today. The culture among its workers was essentially that of a non-profit -- that no one was working there expecting to get rich. It was like working for the public schools or a community hospital. It was doing work that served the public and doing it for cost.

It was the public option -- non-profit health insurance. That administrative cost 30 years ago? It was five percent, remember? Now, it's about 30 percent. Top execs making millions of dollars while jacking up rates year after year? Politicians who will not prohibit this with regulation?

Take it all apart. Pull out the playbook from long, long ago. Go back to hospitalization coverage. Go back to the insurance model (and dump the health management model). Who gets hurt? The Four Million Dollar Man.

2 comments:

A reader writes:There is another aspect of the equation that you have left out of the argument. The cost of going to the doctor is no longer affordable to most people. The charge for the last office visit I went to was $135 - and that was just for a 10 minute routine visit. Why is it that expensive - malpractice insurance rates have exceeded inflation and doctors have had to raise their costs just to remain in business. If govenrment truely wants to reform health care - make getting the care more affordable, not just the insurance. Tort reform along with the other key issues (eliminating the lifetime maximum and eliminating the pre-existing condition exclusion) - the three go hand in hand. ------------------------

I agree! Why can't the feds offer doctors a "public option" of malpractice coverage -- just like flood insurance?